Calculate the value of cash flow option

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Reference no: EM131306412

1) You have won the lottery and have the choice of the three cash flows each with a 7% rate of interest.

Calculate the value of Cash Flow Option 1:

The perpetuity for $800 yearly.

2) You have won the lottery and have the choice of the three cash flows each with a 7% rate of interest.

Calculate the value of Cash Flow Option 2:

$1500 per year for 11 years

3) You have won the lottery and have the choice of the three cash flows each with a 7% rate of interest.

Calculate the value of Cash Flow Option 3:

$1100 per year for 16 years with the first payment occuring today.

4) You have won the lottery and have the choice of the three cash flows each with a 7% rate of interest.

With your rate of return at 7%, which of the three Cash Flow Options would you choose and why?

Reference no: EM131306412

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